<PAGE>

                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549
--------------------------------------------------------------------------------

                                   FORM 10-Q


[X]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

For The Quarterly Period Ended September 30, 2000

[_]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

For The Transition Period From _____ To _____

                        Commission File Number  0-26115

                                INTERLIANT, INC.
                                ----------------
             (Exact Name Of Registrant As Specified In Its Charter)


           Delaware                                       13-3978980
   -------------------------                    --------------------------------
   (State of Incorporation)                    (IRS Employer Identification No.)

   Two Manhattanville Road, Purchase, New York               10577
   -------------------------------------------             --------
   (Address of Principal Executive Offices)               (Zip Code)

                                (914) 640-9000
                                --------------
             (Registrant's Telephone Number, Including Area Code)

                                     -----
     (Former Name, Former Address and Former Fiscal Year, if Changed Since
                                 Last Report)

Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) Yes _X_  No ___, and (2) has been
subject to such filing requirements for the past 90 days. Yes _X_ No ___.

The number of shares outstanding of the Registrant's Common Stock as of November
1, 2000 was 48,403,362

--------------------------------------------------------------------------------
<PAGE>

                                  INTERLIANT

                                     INDEX


                                                                       PAGE NO.
                                                                       --------

PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements (Unaudited)

Condensed Consolidated Balance Sheets as of
 September 30, 2000 and December 31, 1999                                     1

Condensed Consolidated Statements of Operations
 for the Three Months and Nine Months Ended September 30, 2000 and 1999       2

Condensed Consolidated Statements of Cash Flows
 for the Nine Months Ended September 30, 2000 and 1999                        3

Notes to Condensed Consolidated Financial Statements                          4

Item 2.  Management's Discussion and Analysis of Financial
 Condition and Results of Operations                                          11

Item 3.  Quantitative and Qualitative Disclosure of Market Risk               18

PART II.  OTHER INFORMATION                                                   19

Item 2.  Changes in Securities and Use of Proceeds

Item 5.  Other Information

Item 6.  Exhibits and Reports on Form 8-K
<PAGE>

PART I.  FINANCIAL INFORMATION

                                INTERLIANT, INC.

                      CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                 September 30,          December 31,
                                                                                     2000                   1999
                                                                                ----------------       ---------------
                                                                                  (unaudited)
                                                                                                            Note 2
<S>                                                                            <C>                    <C>
Assets
Current assets:
 Cash and cash equivalents                                                      $     34,100,887        $    27,608,039
 Restricted cash                                                                         874,087              1,011,772
 Short-term investments                                                               79,716,640              3,612,229
 Accounts receivable, net of allowance of $2,078,000 and
  $1,378,000 at September 30, 2000 and December 31, 1999, respectively                32,999,810             13,981,358
 Prepaid and other current assets                                                      8,876,073              3,469,763
 Payroll and benefit funds held for customers                                          3,121,728                      -
                                                                                ----------------        ---------------
      Total current assets                                                           159,689,225             49,683,161
                                                                                ----------------        ---------------

 Fixed assets, net                                                                    59,996,936             18,199,010
 Intangibles, net                                                                    135,781,008             93,636,201
 Other assets                                                                          8,037,539              1,356,696
                                                                                ----------------        ---------------
      Total assets                                                              $    363,504,708        $   162,875,068
                                                                                ================        ===============

Liabilities and stockholders' equity
Current liabilities:
  Notes payable and current portion of long-term debt                           $     10,308,926        $     1,211,835
  Accounts payable                                                                    13,958,477              8,359,040
  Accrued expenses                                                                    20,490,410              7,342,551
  Deferred revenue                                                                     8,877,689              5,883,549
  Payroll and benefit funds held for customers                                         3,121,728                      -
                                                                                ----------------        ---------------
      Total current liabilities                                                       56,757,230             22,796,975
                                                                                ----------------        ---------------
Long-term debt, less current portion                                                  13,206,395              2,503,211
7% Convertible Subordinated Notes                                                    164,825,000                      -
Other long-term liabilities                                                              195,961                      -
Minority interest in subsidiary                                                        5,810,940                      -

Stockholders' equity:
  Preferred stock, $.01 par value; 1,000,000 shares authorized; 0 shares
     issued and outstanding                                                                    -                      -
  Common stock, $.01 par value; 200,000,000 shares authorized;
     48,347,431, and 44,601,141 shares issued and outstanding
     at September 30, 2000 and December 31, 1999, respectively                           483,474                446,011
  Additional paid-in capital                                                         298,347,397            201,922,128
  Accumulated deficit                                                               (174,663,843)           (64,822,097)
  Accumulated other comprehensive income (loss)                                       (1,457,846)                28,840
                                                                                ----------------        ---------------
      Total stockholders' equity                                                     122,709,182            137,574,882
                                                                                ----------------        ---------------

      Total liabilities and stockholders' equity                                $    363,504,708        $   162,875,068
                                                                                ================        ===============
</TABLE>

         See accompanying notes to consolidated financial statements.

                                       1
<PAGE>

                                INTERLIANT, INC.

                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (unaudited)

<TABLE>
<CAPTION>
                                                              Three Months Ended                Nine Months Ended
                                                                September 30,                     September 30,
                                                          ------------------------------   -------------------------------
                                                             2000            1999              2000            1999
                                                          -------------    -------------   --------------    -------------
<S>                                                       <C>              <C>              <C>              <C>
Revenues:
  Service revenues                                        $  33,824,673    $  12,030,164    $  86,816,352    $  28,110,067
  Product revenues                                           10,466,414                -       22,941,495               --
                                                          -------------    -------------    -------------    -------------
 Total Revenues                                              44,291,087       12,030,164      109,757,847       28,110,067

Costs and expenses:
  Cost of service revenues                                   23,869,019        6,532,726       59,755,253       15,871,868
  Cost of product revenues                                    7,826,762                        18,715,230
  Sales and marketing                                        11,128,067        5,224,106       31,051,816       11,193,242
  General and administrative (exclusive of non-cash
    compensation shown below)                                19,398,317        7,886,533       48,300,915       18,253,375
  Non-cash compensation                                       3,750,156          567,563       11,293,297        1,702,688
  Depreciation                                                5,713,347        2,058,494       12,088,837        4,157,420
  Amortization of intangibles                                12,631,632        6,055,064       33,944,408       14,841,358
  Restructuring charge                                        2,500,000               --        2,500,000               --
                                                          -------------    -------------    -------------    -------------
                                                             86,817,300       28,324,486      217,649,756       66,019,951
                                                          -------------    -------------    -------------    -------------
Operating loss                                              (42,526,213)     (16,294,322)    (107,891,909)     (37,909,884)
Other income (expense)                                          379,076           96,308          (65,194)         (15,880)
Interest income (expense), net                               (1,267,781)         536,377       (2,065,222)         423,861
                                                          -------------    -------------    -------------    -------------
Loss before minority interest and cumulative effect
  of accounting change                                      (43,414,918)     (15,661,637)    (110,022,325)     (37,501,903)

Minority interest                                             1,080,195               --        1,400,291               --
                                                          -------------    -------------    -------------    -------------
Loss before cumulative effect of accounting change          (42,334,723)     (15,661,637)    (108,622,034)     (37,501,903)

Cumulative effect of accounting change                             --               --         (1,219,712)            --
                                                          -------------    -------------    -------------    -------------
Net loss                                                  $ (42,334,723)   $ (15,661,637)   $(109,841,746)   $ (37,501,903)
                                                          =============    =============    =============    =============
Basic and diluted loss per share:
  Loss before cumulative effect of accounting change      $       (0.88)   $       (0.37)   $       (2.30)   $       (1.13)
  Cumulative effect of accounting change                             --               --            (0.02)              --
                                                          -------------    -------------    -------------    -------------
  Net loss                                                $       (0.88)   $       (0.37)   $       (2.32)   $       (1.13)
                                                          =============    =============    =============    =============

Weighted average shares outstanding - basic and diluted      48,169,884       42,552,296       47,261,378       33,097,059
                                                          =============    =============    =============    =============
</TABLE>

    See accompanying notes to condensed consolidated financial statements.

                                       2
<PAGE>

                               INTERLIANT, INC.

                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (unaudited)

<TABLE>
<CAPTION>
                                                                                       Nine Months Ended
                                                                                          September 30,
                                                                              ------------------------------
                                                                                  2000                  1999
                                                                              ------------     -------------
<S>                                                                           <C>              <C>
Operating activities
  Net cash used in operating activities                                       $ (58,658,407)   $ (16,660,928)
                                                                              -------------    -------------

Investing activities
  Purchases of fixed assets                                                     (29,194,850)      (7,894,496)
  Payments issued in connection with non-compete agreements                              --       (1,000,000)
  Investments in restricted securities                                           (1,000,000)        (952,969)
  Purchases of short-term investments, net                                      (76,104,411)              --
  Acquisitions of businesses, net of cash acquired                              (26,050,557)     (20,499,664)
                                                                              -------------    -------------
  Net cash used in investing activities                                        (132,349,818)     (30,347,129)
                                                                              -------------    -------------

Financing activities
  Proceeds from sale of common stock                                             27,500,000       91,500,000
  Proceeds from issuance of Series A redeemable convertible preferred stock              --       13,000,000
  Proceeds from issuance of 7% Subordinated Convertible Notes                   164,825,000               --
  Proceeds from exercise of options and warrants                                  1,714,047        5,196,032
  Proceeds from issuance of debt                                                  7,581,071        1,277,255
  Repayment of debt                                                              (3,289,376)     (10,965,826)
  Minority investment in subsidiary                                               7,211,231               --
  Offering costs                                                                 (6,982,588)      (7,197,996)
                                                                              -------------    -------------
  Net cash provided by financing activities                                     198,559,385       92,809,465
                                                                              -------------    -------------
Effect of exchange rate changes on cash                                          (1,058,312)              --

Net increase in cash and cash equivalents                                         6,492,848       45,801,408
Cash and cash equivalents at beginning of period                                 27,608,039        6,813,360
                                                                              -------------    -------------
Cash and cash equivalents at end of period                                    $  34,100,887    $  52,614,768
                                                                              =============    =============
</TABLE>

         See accompanying notes to consolidated financial statements.

                                       3
<PAGE>

                               Interliant, Inc.

             Notes to Condensed Consolidated Financial Statements
                        September 30, 2000 (unaudited)

1.  BUSINESS

     Interliant, Inc. (the Company) is a leading Application Service Provider
(ASP), providing customers with a broad range of outsourced e-business
solutions. The Company's service offerings combine hosting infrastructure with
Internet professional service expertise (ASP professional services), which
enable the rapid design, implementation, deployment and management of cost-
effective e-business solutions for customers.

     The Company was organized under the laws of the State of Delaware on
December 8, 1997. Web Hosting Organization LLC (WEB), a Delaware limited
liability company, is the majority and controlling shareholder of the Company.
WEB's investors comprise Charterhouse Equity Partners III, L.P. and Chef
Nominees Limited (collectively, CEP Members), and WHO Management, LLC (WHO).


2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

     The condensed consolidated financial statements include the accounts of the
Company and its wholly and majority owned subsidiaries. All significant
intercompany accounts and transactions have been eliminated.

Interim Financial Information

     The accompanying unaudited financial statements have been prepared in
accordance with accounting principles generally accepted in the United States
for interim financial information and with the regulations of the Securities and
Exchange Commission (SEC), but omit certain information and footnote disclosure
necessary to present the statements in accordance with accounting principles
generally accepted in the United States. The interim financial information as of
September 30, 2000 and for the three and nine month periods ended September 30,
2000 and 1999 is unaudited and has been prepared on the same basis as the
audited consolidated financial statements. In the opinion of management, such
unaudited information includes all adjustments (consisting only of normal
recurring adjustments) necessary for a fair presentation of the interim
information.

     The balance sheet at December 31, 1999 has been derived from the audited
consolidated financial statements at that date but does not include all of the
information and footnotes required by accounting principles generally accepted
in the United States for complete financial statements.

     For further information, refer to the Financial Statements and Notes
thereto and Management's Discussion and Analysis of Financial Condition and
Results of Operations included in the Company's Annual Report on Form 10-K.
Operating results for the three and nine month periods ended September 30, 2000
are not necessarily indicative of the results that may be expected for the year
ending December 31, 2000.

Payroll and Benefit Funds Held for Customers

     As part of its payroll and payroll tax filing services, the Company
collects funds for federal, state and local employment taxes from its customers.
The Company also collects funds for

                                       4
<PAGE>

medical claims and processes payments for its customers. The Company receives
deposits from customers for payroll tax deposits and payment of benefit claims
in advance of disbursing the funds. Related liabilities are recorded for funds
held. All customer funds are held in accounts separate from the Company's
general operating funds.

New Accounting Standards

     In December 1999, the SEC issued Staff Accounting Bulletin 101, "Revenue
Recognition in Financial Statements" (SAB 101), which provides guidance related
to revenue recognition based on interpretations and practices followed by the
SEC. SAB 101 allows companies to report any changes in revenue recognition
related to adopting its provisions as an accounting change at the time of
implementation in accordance with APB Opinion No. 20, "Accounting Changes." The
Company recorded a cumulative effect change in accounting principle, effective
January 1, 2000, for revenue recognized in 1999 for set up fees associated with
Web hosting and application hosting services. Effective January 1, 2000, such
fees are being amortized over the longer of the contractual period or expected
life of the customer relationship. For the nine months ended September 30, 2000,
the Company recorded a cumulative effect charge of $1.2 million to reflect the
change in accounting principle.

     In April 2000, the Financial Accounting Standards Board (FASB) issued
Interpretation No. 44, "Accounting for Certain Transactions Involving Stock
Compensation", an Interpretation of APB No. 25, which became effective beginning
July 1, 2000. The Company believes the adoption of this new accounting standard
will not have a significant effect on its financial position or results of
operations.

     In June, 1998, the FASB issued Statement no. 133, "Accounting for
Derivative Instruments and Hedging Activities", which statements are to be
adopted effective January 1, 2001. To date the Company has not made use of the
financial instruments covered by this statement and therefore there is no impact
on its financial position or results of operations. Should the Company make use
of such financial instruments in the future, it does not believe such use will
have a significant effect on its financial position or results of operations.

Use of Estimates

     The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, and disclosure of contingent liabilities, at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.

Net Loss Per Share

     Net loss per share is presented in accordance with the provisions of
Statement of Financial Accounting Standards No. 128, "Earnings Per Share." Basic
net loss per share is computed based on the weighted average number of shares of
common stock outstanding during the period. Diluted loss per share does not
differ from basic loss per share since potential common shares to be issued upon
the exercise of stock options are anti-dilutive for the periods presented.


3.  ACQUISITIONS

     During the nine months ended September 30, 2000, the Company consummated
the following acquisitions, each of which has been accounted for using the
purchase method of accounting:

     In February 2000, the Company acquired all of the outstanding stock of Soft
Link, Inc., a provider of Enterprise Resource Planning (ERP) solutions based on
PeopleSoft software. The purchase price consisted of $18.1 million in cash and
254,879 shares of the Company's common stock (Common Stock) valued at $36.80 per
share. The agreement provides for contingent consideration, not to exceed $10.0
million, if specified revenues and earnings targets are met for the calendar
year 2000. The contingent consideration is payable 50% in cash, and the
remaining 50% in cash or Common Stock at the Company's option. The payment of
contingent

                                       5
<PAGE>

consideration, if any, will be recorded as additional purchase price.

     In February 2000, the Company purchased substantially all of the assets and
assumed certain liabilities of reSOURCE PARTNER, Inc., a provider of hosting and
implementation services for outsourced human resources and finance solutions
primarily using PeopleSoft software. The purchase price consisted of $2.5
million in cash and the issuance of 1,041,179 shares of Common Stock valued at
$36.80 per share.

     In May 2000, the Company, through its subsidiary Interliant International,
Inc. (International), formed Interliant Europe BV (BV). The shareholders of BV
are International and @viso Limited (@viso) owning 51% and 49%, respectively, of
the outstanding stock of BV. International's investment in BV of approximately
$7.6 million was made with the proceeds of a loan from @viso which bears
interest at the rate of 8% per annum and which is payable in Euros at the
earlier of an initial public offering of BV or February 28, 2005. At the option
of BV, interest payable may be added to the principal amount of the loan on each
interest payment date.

     In May 2000, a subsidiary of BV purchased certain data center assets
located in Paris, France and certain hosting customers and intellectual property
from Cegetel Enterprises, SA. The purchase price was approximately $1.9 million,
of which $0.3 million was paid in cash at closing and the balance in the form of
a non interest-bearing note payable in equal quarterly installments through
February 2002. The entire purchase price has been allocated to the acquired data
center assets.

     In June 2000, the Company purchased all of the outstanding stock of
Knowledge Systems, Inc., an ASP specializing in professional services and
hosting for associations. The purchase price consisted of $0.9 million in cash,
$0.3 million assumption of seller debt and 46,407 shares of Common Stock valued
at $20.80 per share. The agreement also provides for contingent purchase
consideration of up to $5.0 million if certain specified hosting revenues and
gross margin targets are achieved for the twelve-month period ending September
2001. The payment of contingent consideration, if any, will be recorded as
additional purchase price.

     In July 2000, the Company purchased all of the outstanding stock of
Interactive Software, Inc. (ISI) and Milestone Services, Inc. (MSI), providers
of ERP software consulting and related solutions based on Oracle software. The
purchase price for ISI consisted of $1.6 million in cash and the issuance of
193,612 shares of Common Stock valued at $15.96 per share. The purchase price
for MSI consisted of $1.8 million in cash and the issuance of 129,073 shares of
Common Stock valued at $15.96 per share. The agreements also provide for
contingent purchase consideration of up to $6.5 million in the aggregate if
certain operating performance and product development targets are achieved
during the twelve-month period ending July 2001, and eighteen-month period
ending January 2002. The contingent consideration is payable in a combination of
cash (not less than 40%) and Common Stock. The payment of contingent purchase
consideration, if any, will be recorded as additional purchase price.

      During the nine months ended September 30, 2000, the Company issued
188,365 shares of Common Stock valued at $4.4 million and paid $1.4 million to
satisfy contingent payment obligations to certain sellers of businesses to the
Company.

     The allocation of purchase price for the acquisitions completed in 2000 as
reflected in the September 30, 2000 condensed consolidated balance sheet is
preliminary in that they are based on the Company's initial assessment of the
fair value of assets acquired. The allocations may be modified among the various
components of intangible assets as the Company finalizes the purchase accounting
for such acquisitions.

                                       6
<PAGE>

     The following unaudited condensed pro forma information presents the
unaudited results of operations of the Company as if the acquisitions completed
in 2000 and 1999 had occurred on January 1, 1999:

<TABLE>
<CAPTION>
                                                                                             Nine Months Ended
                                                                                                September 30,
                                                                                     -------------------------------------
                                                                                         2000                     1999
                                                                                     -------------             -----------
                                                                                     (in thousands, except per share data)
<S>                                                                                  <C>                     <C>

     Revenues                                                                        $  126,775               $ 105,320
     Loss before cumulative effect of accounting change                                (114,581)                (64,527)
     Net loss                                                                          (115,801)                (64,527)
     Loss per share before cumulative effect
      of accounting change - basic and diluted                                       $    (2.39)              $   (1.73)
     Net loss per share, basic and diluted                                           $    (2.42)              $   (1.73)
</TABLE>

4.  DEBT

     In February 2000, the Company sold $154.8 million of 7% Convertible
Subordinated Notes (Notes) in a private placement, including $4.8 million sold
upon exercise of the initial purchasers' over-allotment option. The Notes are
convertible, at the option of the holder, at any time on or prior to maturity
into Common Stock at a conversion price of $53.10 per share, which is equal to a
conversion rate of 18.8324 shares per $1,000 principal amount of notes. Interest
is payable semi-annually, beginning August 2000. The Notes mature on February
16, 2005. Upon the occurrence of certain events, the Company may redeem the
Notes prior to maturity.

     In March 2000, the Company sold $10.0 million of 7% Convertible
Subordinated Notes in a private placement. Such notes have substantially the
same terms as the Notes described above.

     During the nine months ended September 2000, the Company financed
approximately $8.2 million of computer equipment with Dell Financial Services
under capital lease arrangements. The leases are payable in monthly installments
over 24 months, with interest rates of approximately 15% per annum.

5.  STOCKHOLDERS' EQUITY

Common Stock

     In January and February 2000, the Company sold an aggregate of 787,881
shares of Common Stock in private placements to three purchasers for total
proceeds of $27.5 million. In connection with the sales, the Company issued
warrants to purchase 157,575 shares of Common Stock at an average exercise price
of $34.90 per share, which approximated the market price of the Company's Common
Stock at the date of issuance. The warrants expire December 31, 2000.

Stock Option Plan

     In June 2000, the shareholders of the Company approved an increase in the
number of shares of Common Stock available under the 1998 Stock Option Plan (the
Plan) from 3,800,000 shares to 8,500,000.

     During the nine months ended September 30, 2000, under the Plan, the
Company granted options to purchase 2,451,925 shares of Common Stock at exercise
prices ranging from $9.98 to $42.88 per share. The weighted-average exercise
price of the options granted was $20.58 per share.

                                       7
<PAGE>

     During the nine months ended September 30, 2000, options to purchase
1,152,500 shares of Common Stock were exercised. As of September 30, 2000,
options to purchase 3,131,647 shares of Common Stock were outstanding, of which
222,891 options were vested.

     In January 2000, the Company entered into a four-year employment agreement
with a new Chief Executive Officer. In connection with this agreement, the
Company issued this employee options to purchase 1,500,000 shares of Common
Stock at an average exercise price of $18.00 per share. Such options were not
issued pursuant to the Plan. The average exercise price of the options was below
the fair value of the Common Stock as of the measurement date, and as a result,
the Company will recognize approximately $30.0 million as compensation expense
over the four-year vesting period of the options. For the nine months ended
September 30, 2000, the Company expensed $10.0 million under this arrangement.

Employee Stock Purchase Plan

     In June 2000, the shareholders of the Company approved the adoption of the
2000 Employee Stock Purchase Plan (ESPP), effective July 2000, which provides
for the sale of up to 1,500,000 shares of Common Stock to eligible participating
employees of the Company through periodic payroll deductions. The purchase price
of the shares is the lesser of 85 percent of the Common Stock's fair market
value on the first day of the purchase period or the last day of the purchase
period for each six-month purchase period. The Company intends for the ESPP to
qualify as an "employee stock purchase plan" under section 423 of the Internal
Revenue Code of 1986, as amended.

6.   SEGMENT INFORMATION

     The Company currently has three reportable segments: application hosting,
Web hosting, and ASP professional services. The summary unaudited results of
operations for the nine months ended September 30, 2000 and 1999 for each of the
segments is shown below.

<TABLE>
<CAPTION>
                                                        Nine Months Ended
                                                          September 30,
                                           ---------------------------------------------
                                                  2000                     1999
                                           --------------------     --------------------
                                                          (in thousands)
<S>                                        <C>                      <C>
Revenues from external customers:
  Application hosting                                $  29,590                $  10,597
  Web hosting                                           15,841                   11,298
  ASP professional services                             58,820                    4,131
  Other                                                  5,507                    2,084
                                                     ----------               ----------
    Total                                            $ 109,758                $  28,110
                                                     ==========               ==========

Operating income (loss):
  Application hosting                                $ (17,938)               $  (3,611)
  Web hosting                                          (13,829)                 (10,218)
  ASP professional services                              3,993                      525
  Other                                                (80,118)                 (24,606)
                                                     ----------               ----------
    Total                                            $(107,892)               $ (37,910)
                                                     ==========               ==========


                                           September 30, 2000        December 31, 1999
                                           --------------------     --------------------
Segment assets:
  Application hosting                                $  44,993                $  11,223
  Web hosting                                           13,254                    7,716
  ASP professional services                             33,440                   11,704
  Other                                                271,818                  132,232
                                                     ----------               ----------
    Total                                            $ 363,505                $ 162,875
                                                     ==========               ==========
</TABLE>

         The Company's management generally reviews the results of operations of
each segment exclusive of depreciation and amortization (aggregating $46.0
million and $19.0 million, respectively, for the nine months ended September 30,
2000 and 1999), non-cash compensation and interest related to each segment.
Accordingly, such expenses are excluded from the segment operating loss and are
shown under the Other caption. In addition, all intangible assets and corporate
expenses of the Company are included in the Other caption.

         The Company believes that the reportable segments may change in future
periods as management continues to integrate acquisitions and further develop
and enhance its service offerings.

                                       8
<PAGE>

7.   RESTRUCTURING CHARGE

         In September 2000, the Company announced a plan to accelerate its
acquisition integration program by consolidating geographically dispersed
functions. The plan includes the elimination of approximately 300 jobs, the exit
of certain leased facilities and other related contractual arrangements, and the
termination of a software development project. Consequently, the Company
recorded a charge of $2.5 million for the three months ended September 30, 2000.
As of September 30, 2000, 38 employees were terminated and $0.6 million of the
restructuring reserve was utilized.

The following table summarizes the status of the restructuring reserve by major
component:

<TABLE>
<CAPTION>
                                                  Total Reserve               Charges              Reserve Balance at
                                              Charged to Expense          Against Reserve          September 30, 2000
                                              ------------------          ---------------          ------------------
                                                                           (in thousands)
<S>                                           <C>                        <C>                       <C>
Severance and related costs                              $ 1,802                   $ (215) (1)                 $ 1,587
Facilities' exit and related costs                           306                                                   306
Capitalized software writeoff                                392                     (389)                           3
                                              ------------------          ---------------          -------------------
  Total                                                  $ 2,500                   $ (604)                     $ 1,896
                                              ==================          ===============          ===================
</TABLE>

(1)  Represents cash payments to terminated employers.

                                       9
<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

     You should read the following description of our financial condition and
     results of operations in conjunction with the Unaudited Condensed
     Consolidated Financial Statements and the Notes thereto. This discussion
     contains forward-looking statements based upon current expectations that
     involve risks and uncertainties.

     FORWARD LOOKING STATEMENTS AND ASSOCIATED RISKS

          This Form 10-Q contains forward-looking statements within the meaning
     of Section 21E of the Securities Exchange Act of 1934, as amended, and
     Section 27A of the Securities Act of 1933, as amended. Certain forward-
     looking statements relate to, among other things, future results of
     operations, profitability, growth plans, sales, expense trends, capital
     requirements and general industry and business conditions applicable to our
     business. Any statements contained herein that are not statements of
     historical fact may be deemed to be forward-looking statements. Our actual
     results and the timing of certain events may differ significantly from the
     results discussed in the forward-looking statements. These forward-looking
     statements are based largely on our current expectations and are subject to
     a number of risks and uncertainties. The words "anticipate," "believe,"
     "estimate" and similar expressions used herein are generally intended to
     identify forward-looking statements. In addition to the other risks
     described elsewhere in this report and in other filings by the Company with
     the Securities and Exchange Commission, important factors to consider in
     evaluating such forward-looking statements include but are not limited to:
     changes in external competitive market factors; changes in our business
     strategy; an inability to execute our strategy due to unanticipated changes
     in the emerging hosting and Internet services industries or the economy in
     general; difficulties in the timely expansion of our network and data
     centers or in the acquisition and integration of new businesses;
     difficulties in retaining and attracting new employees or customers;
     difficulties in developing or deploying new services; risks associated with
     rapidly changing technology; and various other competitive factors that may
     prevent us from competing successfully in existing or future markets. In
     light of these risks and uncertainties, there can be no assurance that the
     forward-looking statements contained herein will in fact be realized and we
     assume no obligation to update this information.

     OVERVIEW

          We are a leading application service provider, or ASP, providing our
     customers with a broad range of outsourced e-business solutions. Our
     customers face significant challenges in doing business on the Internet due
     to its technical complexity, their lack of technical skills, the cost of
     implementation and ongoing support and the time necessary to implement
     solutions. By providing comprehensive outsourced solutions that combine our
     hosting infrastructure with ASP professional services expertise, we can
     rapidly design, implement, deploy and effectively manage cost-effective e-
     business solutions for our customers.

          As an ASP, we provide:

          .  hosting infrastructure for our customers' network-based
             applications, which allows our customers to store their databases,
             applications or Web sites on equipment owned and maintained by us
             or on our customers' equipment located in our data centers;

          .  professional services for designing, implementing and deploying
             these network-based applications; and

          .  operations support, systems and applications management and
             customer care for our customers and their end-users.

                                       10
<PAGE>

          We have acquired 27 operating companies providing application hosting,
Web hosting and ASP professional services solutions, for total consideration of
approximately $204 million. We have built or acquired our data centers and have
integrated the acquired hosting operations into those data centers. The
acquisitions have been accounted for using the purchase method of accounting,
which has resulted in the recognition of approximately $194 million of
intangible assets on our balance sheet. Recoverability of our investment in
intangible assets is dependent on our ability to operate our businesses
successfully and generate positive cash flows from operations. Annual charges
for amortization of intangible assets with respect to acquisitions completed to
date will be approximately $51 million, which will result in increased losses or
reduced net income. The purchase consideration for the acquisitions was in the
form of cash, stock or a combination of cash, stock and issuance of debt.

          Since our inception in December 1997, we have experienced operating
losses and negative cash flows from operating activities for each quarterly and
annual period. As of September 30, 2000, we had an accumulated deficit of $174.7
million. The revenue and income potential of our business is unproven and our
limited operating history makes an evaluation of us and our prospects difficult.
We anticipate increased operating expenses as we:

        .  expand our sales and marketing initiatives to continue to grow our
           brands and drive increased sales leads;
        .  fund greater levels of product development;
        .  continue to complete and equip our data centers; and
        .  implement billing, accounting, operations and customer service
           systems.

          Although we have experienced revenue growth, which to date has been
primarily attributable to acquisitions, we do not believe that this growth is
necessarily indicative of future operating results. We expect to continue to
incur operating losses for the foreseeable future. We cannot be assured that we
will ever achieve profitability on a quarterly or annual basis, or, if achieved,
that we will sustain profitability.

RESULTS OF OPERATIONS

          We derive our revenues from application hosting, Web hosting, ASP
professional services and other services. Application hosting revenues primarily
comprise monthly usage and outsourcing fees, including bandwidth fees, and one-
time set up fees. Web hosting revenues consist primarily of hosting fees and set
up fees, which cover costs incurred by us to establish customers' Web sites. We
provide shared, dedicated and co-located Web hosting. We charge our Web hosting
customers a fixed amount for bandwidth availability and incremental fees if
those fixed amounts are exceeded. In addition, our shared Web hosting customers
are also charged for disk space on a server, dedicated hosting customers are
charged for use of one or more dedicated servers and our co-location customers
are charged for the amount of data center space such co-location customers'
servers occupy. We charge flat rates for our enhanced Internet services. ASP
professional service charges generally are fee-based on a time and materials
basis.

          Our contracts with our application hosting customers range in length
from month-to-month to three years. Our contracts with our Web hosting customers
typically range in length from month-to-month to one year. A large proportion of
our Web hosting customer contracts are cancelable by either party with 30 days'
notice. Revenues derived from hosting are recognized ratably over the applicable
contractual period. Payments received and billings in advance of providing
services are deferred until such services are provided. Revenues from ASP
professional services are recognized as the services are rendered. Substantially
all of our ASP professional services contracts call for billings on a time and
materials basis.

          In December 1999, the SEC issued Staff Accounting Bulletin 101,
"Revenue Recognition in Financial Statements" (SAB 101), which provides guidance
related to revenue recognition

                                       11
<PAGE>

based on interpretations and practices followed by the SEC. SAB 101 allows
companies to report any changes in revenue recognition related to adopting its
provisions as an accounting change at the time of implementation in accordance
with APB Opinion No. 20, "Accounting Changes." The Company recorded a cumulative
effect change in accounting principle, effective January 1, 2000, for revenue
recognized in 1999 for set up fees associated with Web hosting and application
hosting services. Effective January 1, 2000 such fees are being amortized over
the longer of the contractual period or expected life of the customer
relationship (generally one year). For the nine months ended September 30, 2000,
the Company recorded a cumulative effect charge of $1.2 million to reflect the
change in accounting principle.

          Cost of revenues consists primarily of salaries and related expenses
associated with ASP professional services and data center operations, data
center facilities costs, costs of hardware and software products sold to
customers, and data communications expenses, including one-time fees for circuit
installation and variable recurring circuit payments to network providers.
Monthly circuit charges vary based upon circuit type, distance and usage, as
well as the term of the contract with the carrier.

          Sales and marketing expense consists of personnel costs associated
with the direct sales force, internal telesales, product development and product
marketing employees, as well as costs associated with marketing programs,
advertising, product literature, external telemarketing costs and corporate
marketing activities, including public relations.

          General and administrative expense includes the cost of customer
service functions, finance and accounting, human resources, legal and executive
salaries, corporate overhead, acquisition integration costs and fees paid for
professional services.

THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999

Revenues

          Revenues increased $32.3 million, from $12.0 million for the three
months ended September 30, 1999 to $44.3 million for the corresponding 2000
period. The increase in revenues was due primarily to the 15 acquisitions
consummated during 1999 and 2000, and organic growth of approximately 21% which
is calculated based on the pro forma revenue for the respective periods.

Cost of Revenues

          Cost of revenues increased by $25.2 million, from $6.5 million for the
three months ended September 30, 1999 to $31.7 million for the corresponding
2000 period. This increase was due primarily to the 15 acquisitions consummated
during 1999 and 2000, and increased infrastructure costs, including salaries and
benefits, facilities and other costs to support current and future revenue
growth. In the future, cost of revenues will likely continue to increase due to
capacity utilization, higher facilities costs associated with additional
investments in existing and new data centers, changes in the mix of services,
fluctuations in bandwidth costs and increased levels of staffing to support
anticipated revenue growth.

           Services gross margin for the three months ended September 30, 2000
and 1999 was 29.4% and 45.7%, respectively. The decline in services gross margin
is primarily the result of a higher proportion of revenue from ASP professional
services to total revenues related to our acquisitions of ASP professional
services businesses during the last twelve months, which typically generate
lower gross margins as compared with our hosting services.

Sales and Marketing

          Sales and marketing expense increased by $5.9 million, from $5.2
million for the three months ended September 30, 1999 to $11.1 million for the
corresponding 2000 period. This

                                       12
<PAGE>

increase was attributable to the 15 acquisitions consummated during 1999 and
2000, higher spending associated with our brand marketing and sales lead
generation campaigns and expansion of our direct sales force. A key component of
our revenue growth strategy is to significantly increase our sales and marketing
activities. We expect that this will include the continued expansion of our
sales force, increased marketing efforts focused on sales lead generation, and
the development of reseller and referral sales channels. As a result, we expect
sales and marketing expenses to continue increasing in future periods to support
anticipated revenue growth.

General and Administrative

          General and administrative expense (including non cash compensation)
increased by $14.7 million, from $8.4 million for the three months ended
September 30, 1999 to $23.1 million for the corresponding 2000 period. This
increase in general and administrative expense was attributable to the 15
acquisitions consummated during 1999 and 2000, a $3.2 million increase in non-
cash compensation charges and increased investments in infrastructure and levels
of staffing with respect to the customer service, billing, accounting and human
resources functions to support the growth of the business.

          In February 2000, we issued options to purchase 1,500,000 shares of
Common Stock to our Chief Executive Officer at exercise prices that were below
the market price of our Common Stock at the date of grant. In total, such
options were valued at approximately $30.0 million, and for the three months
ended September 30, 2000, we charged $3.8 million to non-cash compensation
expense in connection with this arrangement.

Depreciation

          Depreciation expense increased by $3.6 million, from $2.1 million for
the three months ended September 30, 1999 to $5.7 million for the corresponding
2000 period. The increase in depreciation expense was attributable to the 15
acquisitions consummated during 1999 and 2000, our investments in equipment,
furniture and construction to complete and equip our data centers and customer
care facilities, and investments in computer equipment and software to support
customer growth.

Amortization

          Amortization expense increased by $6.5 million, from $6.1 million for
the three months ended September 30, 1999 to $12.6 million for the corresponding
2000 period. This increase in amortization expense was attributable to the
increase in intangible assets related to the 15 acquisitions consummated during
1999 and 2000.

Restructuring charge

           We recorded a $2.5 million restructuring charge during the three
months ended September 30, 2000 in connection with our plan to accelerate the
integration of our acquisitions completed to date. The plan, which was announced
in late September 2000 as part of our consolidation of geographically dispersed
functions, includes the elimination of approximately 300 jobs, the exit of
certain leased facilities and other related contractual arrangements, and the
termination of a software development project. We estimate that the majority of
the restructuring reserve will be expended by the end of the second quarter of
2001. As a result of this integration plan we expect to derive approximately
$12.0 million in annual cost savings.

                                       13
<PAGE>

NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999

Revenues

          Revenues increased $81.7 million, from $28.1 million for the nine
months ended September 30, 1999 to $109.8 million for the corresponding 2000
period. The increase in revenues was primarily due to the 15 acquisitions
consummated during 1999 and 2000, and organic growth of approximately 20% which
is calculated based on the pro forma revenues for the respective periods.

          On a pro forma basis, giving effect to acquisitions completed through
September 30, 2000, revenues for the nine months ended September 30, 2000 were
$126.8 million.

Cost of Revenues

          Cost of revenues increased by $62.6 million, from $15.9 million for
the nine months ended September 30, 1999 to $78.5 million for the corresponding
2000 period. This increase was due primarily to the 15 acquisitions consummated
during 1999 and 2000 and increased infrastructure costs, including salaries and
benefits, facilities and other costs to support current and future revenue
growth. In the future, cost of revenues will likely continue to increase due to
capacity utilization, higher facilities costs associated with additional
investments in existing and new data centers, changes in the mix of services,
fluctuations in bandwidth costs and increased levels of staffing to support
anticipated revenue growth.

          On a pro forma basis, cost of revenues for the nine months ended
September 30, 2000 were $90.4 million.

           Services gross margin for the nine months ended September 30, 2000
and 1999 was 31.1% and 43.5%, respectively. The decrease in services gross
margins are the result of a higher proportion of revenue from ASP professional
services to total revenues related to our recent acquisitions of ASP
professional services businesses, which typically generate lower gross margins
as compared with our hosting services.

Sales and Marketing

          Sales and marketing expense increased by $19.9 million, from $11.2
million for the nine months ended September 30, 1999 to $31.1 million for the
corresponding 2000 period. This increase was attributable to the 15 acquisitions
consummated during 1999 and 2000, higher spending associated with our brand
marketing and sales lead generation campaigns and expansion of our direct sales
force. A key component of our revenue growth strategy is to significantly
increase our sales and marketing activities. We expect that this will include
the continued expansion of our sales force, increased marketing efforts focused
on sales lead generation, and the development of reseller and referral sales
channels. As a result, we expect sales and marketing expenses to continue
increasing in future periods to support anticipated revenue growth.

          Sales and marketing costs as a percentage of revenue was 28.3% and
39.8% for the nine months ended September 30, 2000 and 1999, respectively. The
percentage decrease is due primarily to a higher proportion of ASP professional
services revenues for the 2000 period, which services have historically utilized
lower marketing costs as a percentage of revenues.

General and Administrative

          General and administrative expense (including non cash compensation)
increased by $39.6 million, from $20.0 million for the nine months ended
September 30, 1999 to $59.6 million for the corresponding 2000 period. This
increase in general and administrative expense was attributable to the 15
acquisitions consummated during 1999 and 2000, a $9.6 million increase in

                                       14
<PAGE>

non-cash compensation charges, and increased investments in infrastructure and
levels of staffing with respect to the customer service, billing, accounting and
human resources functions to support the growth of the business. Non-cash
charges to operations in connection with the options granted to our Chief
Executive Officer amounted to $10.0 million for the nine months ended September
30, 2000.

          On a pro forma basis, general and administrative expense for the nine
months ended September 30, 2000 was $64.2 million.

Depreciation

          Depreciation expense increased by $7.9 million, from $4.2 million for
the nine months ended September 30, 1999 to $12.1 million for the corresponding
2000 period. The increase in depreciation expense was attributable to the 15
acquisitions consummated during 1999 and 2000, our investments in equipment,
furniture and construction to complete and equip our data centers and customer
care facilities, and investments in computer equipment and software to support
customer growth. On a pro forma basis, depreciation expense for the nine months
ended September 30, 2000 was $12.4 million.

Amortization

          Amortization expense increased by $19.1 million, from $14.8 million
for the nine months ended September 30, 1999 to $33.9 million for the
corresponding 2000 period. This increase in amortization expense was
attributable to the increase in intangible assets related to the 15 acquisitions
consummated during 1999 and 2000.

          On a pro forma basis, amortization expense for the nine months ended
September 30, 2000 was $38.1 million.

Restructuring charge

           We recorded a $2.5 million restructuring charge during the nine
months ended September 30, 2000 in connection with our plan to accelerate the
integration of our acquisitions completed to date. The plan, which was announced
in late September 2000, as part of our consolidation of geographically dispersed
functions includes the elimination of approximately 300 jobs, the exit of
certain leased facilities and other related contractual arrangements, and the
termination of a software development project. We estimate that the majority of
the restructuring reserve will be expended by the end of the second quarter of
2001. As a result of this integration plan we expect to derive approximately
$12.0 million in annual cost savings.

                                       15
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

          We have financed our operations and acquisitions primarily from
private placements of debt and equity, and our initial public offering of common
stock. We had $113.8 million in cash, cash equivalents and short-term
investments at September 30, 2000, including $10.1 million held by Interliant
Europe, a consolidated subsidiary that is 51% owned by us.

          In January and February 2000, we raised $27.5 million in strategic
funding from equity investments by Dell Computer, Network Solutions and BMC
Software. In connection with these sales, we issued warrants to purchase 157,575
shares of common stock with a weighted average exercise price of $34.90 per
share, which expire on December 31, 2000. We also entered into commercial
agreements with each of the strategic investors. We anticipate that these
commercial agreements will result in significant incremental revenues, expenses,
operating losses and capital expenditures for the foreseeable future in the
expectation that eventually they will result in positive operating income. The
foregoing is a forward-looking statement and is based on our current business
plan and the assumptions on which that plan is based.

          In February 2000, we sold $154.8 million of 7% Convertible
Subordinated Notes in a private placement, including $4.8 million sold upon
exercise of the initial purchasers' over-allotment option. The notes are
convertible, at the option of the holder, at any time on or prior to maturity,
into Common Stock at a conversion price of $53.10 per share, which is equal to a
conversion rate of approximately 18.8324 shares per $1,000 principal amount of
notes. Semi-annual interest payments of $5.4 million commenced in August 2000.
The notes mature on February 16, 2005. Upon the occurrence of certain events, we
may redeem the notes prior to maturity.

          In March 2000, we sold $10.0 million of 7% Convertible Subordinated
Notes in a private placement with Microsoft. Such notes have substantially the
same terms as the notes described above.

          We completed six acquisitions during the nine months ended September
30, 2000 (see Note 3 of Notes to Condensed Consolidated Financial Statements for
the nine months ended September 30, 2000, included in Part I of this Form 10-Q).
The total cash consideration for these acquisitions was $24.5 million, net of
acquired cash.

          During the nine months ended September 30, 2000, we acquired $45.6
million of computer equipment and software, furniture and leasehold improvements
of which $13.2 million was financed under capital lease arrangements. Such fixed
asset additions were primarily driven by our data center and customer care
facilities' expansion and customer-driven computer equipment and software
purchases to support revenue growth. We have a $25 million lease facility with
Dell Financial Services (DFS), under which we are financing Dell equipment
purchases. As of September 30, 2000 approximately $8.2 million of computer
equipment was financed under the DFS facility. We expect to continue such
financing activities and obtain additional equipment financing, although no
assurances can be given that additional financing will be available when needed.

          In addition to funding ongoing operations and capital expenditures,
our principal commitments consist of non-cancelable operating leases, debt
service and contingent earnout payments to certain sellers of operating
companies acquired by us. In connection with certain acquisitions, we paid $1.4
million in cash during the nine months ended September 30, 2000. If all targets
for earnouts entered into through September 30, 2000 are achieved in full, the
maximum remaining cash consideration due pursuant to these earnouts will be $0.4
million, $8.1 million and $0.7 million in 2000, 2001 and 2002, respectively.
Certain agreements provide for issuance of common stock in lieu of cash, at our
option.

                                       16
<PAGE>

          We currently believe that our existing cash, cash equivalents and
short-term investments will be adequate to meet operating needs through 2001.
The foregoing is a forward-looking statement and is based on our current
business plan and the assumptions on which it is based, including our ability to
successfully integrate acquisitions and achieve the expected benefits, such as
operational efficiencies and revenue improvements from cross-selling
opportunities. If our plans change or our assumptions prove to be inaccurate, we
may be required to seek additional capital sooner than we currently anticipate.
We may also seek to raise additional capital to take advantage of favorable
conditions in the capital markets. It is likely that after 2001 we will need
additional funds to conduct our operations, continue our acquisition and
internal growth programs, and fund debt service obligations. In order to fund
the repayment of our existing debt service obligations, we will either have to
increase revenues without a commensurate increase in costs to generate
sufficient cash from operations, refinance existing debt obligations, raise
additional equity, or execute a combination thereof. We cannot be assured,
however, that if we need or seek additional capital that we will be successful
in obtaining it.

ITEM 3. QUANTATIVE AND QUALITATIVE DISCLOSURE OF MARKET RISK

Interest Rate Risk

           We have limited exposure to financial market risks, including changes
in interest rates. At September 30, 2000, we had short-term investments of
approximately $79.7 million. These short-term investments consist of highly
liquid investments in debt obligations of highly rated entities with maturities
of between 90 days and one year. These investments are subject to interest rate
risk and will fall in value if market interest rates increase. We expect to hold
these investments until maturity, and therefore expect to realize the full value
of these investments, even though changes in interest rates may affect their
value prior to maturity. If interest rates decline over time, this will result
in a reduction of our interest income by approximately $0.8 million annually for
each percentage decrease, based on the amount of short-term investments on hand
as of September 30, 2000.

           Substantially all of our indebtedness bears interest at a fixed rate
to maturity which therefore minimizes our exposure to interest rate
fluctuations.

                                       17
<PAGE>

PART II. OTHER INFORMATION

                               INTERLIANT, INC.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS.

(c)  In the nine months ended September 30, 2000, options to purchase 1,152,500
shares of Common Stock were exercised at a weighted average exercise price of
$1.54 per share.

     In January and February 2000, Interliant sold an aggregate of 787,881
shares of Common Stock to six strategic partners for a total purchase price of
$27.5 million. In connection with these sales, Interliant issued warrants to
purchase an aggregate of 157,575 shares of common stock with a weighted average
exercise price of $34.90 per share.

     In February 2000, Interliant sold an aggregate principal amount of $154.8
million of 7% Convertible Subordinated Notes to the initial purchasers and in
March 2000, Interliant sold an aggregate principal amount of $10.0 million of
the same 7% Convertible Subordinated Notes to Microsoft Corporation.

     In February 2000, in connection with the acquisition of Soft Link, Inc,
Interliant issued, as partial consideration, 254,879 shares of Common Stock to
certain stockholders of SoftLink, Inc.

     In February 2000, in connection with the purchase of substantially all of
the assets and assumption of certain liabilities of reSOURCE PARTNER, Inc.,
Interliant issued, as partial consideration, 1,041,179 shares of Common Stock to
certain stockholders of reSOURCE PARTNER, Inc.

     In June 2000, in connection with the acquisition of Knowledge Systems,
Inc., Interliant issued, as partial consideration, 46,407 shares of Common Stock
to certain stockholders of Knowledge Systems, Inc.

     In July 2000, in connection with the acquisition of Interactive Software,
Inc., Interliant issued, as partial consideration, 193,612 shares of Common
Stock to certain stockholders of Interactive Software, Inc.

     In July 2000, in connection with the acquisition of Milestone Services,
Inc., Interliant issued, as partial consideration, 129,073 shares of Common
Stock to certain stockholders of Milestone Services, Inc.

     In August 2000, Interliant issued warrants to purchase a maximum of 180,000
shares of Common Stock at an exercise price of $13.06 to Feld Co-Investment
Partnership L.P.

     During the nine months ended September 30, 2000, in connection with the
attainment of certain earnout targets, Interliant issued, as partial
consideration, 37,482 shares of Common Stock to stockholders of Net Daemons
Associates, Inc, 37,238 shares of Common Stock to stockholders of The Daily-e
Corporation, 11,550 shares of Common Stock to stockholders of Sales Technology
Ltd., 88,916 shares of Common Stock to stockholders of Triumph Technologies,
Inc., and 13,179 shares of Common Stock to stockholders of Digiweb, Inc.

     Interliant believes that the transactions described above were exempt from
registration under the Securities Act pursuant to Section 4(2) of the Securities
Act, Regulation D or Rule 144A promulgated thereunder, as transactions by an
issuer not involving public offering, or pursuant to Rule 701 promulgated under
Section 3(b) of the Securities Act, as transactions pursuant to written
compensatory benefit plans and contracts relating to compensation. The
recipients of securities in each of these transactions represented that they
were acquiring the securities for investment only and not with a view to or for
sale in connection with any distribution thereof and appropriate

                                       18
<PAGE>

legends were affixed to the securities certificates issued in such transactions.
All recipients had adequate access, through their relationships with Interliant,
to information about Interliant, or were given an adequate opportunity to review
information about Interliant.

ITEM 5.  OTHER INFORMATION.

     For information concerning acquisitions refer to Footnote 3 to the
Consolidated Financial Statements for the nine months ended September 30, 2000,
included in Part I of this Form 10-Q and incorporated herein by reference.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

(a)    Exhibits

10.41  Commercial Lease Agreement, dated as of September 12, 2000, between
       Cummings Properties, LLC and Interliant Consulting and Professional
       Services, Inc.

10.42  Lease Agreement, dated as of July 25, 2000, between University Town
       Center Associates, L.P. (d/b/a TrizecHahn Borden Building Management) and
       reSOURCE PARTNER, INC.

10.43  Third Amendment to Standard Lease Agreement, dated as of May 15, 2000,
       between AGBRI Fannin Limited Partnership and Interliant, Inc.

10.44  Fourth Amendment to Standard Lease Agreement, dated as of September 29,
       2000, between AGBRI Fannin Limited Partnership and Interliant, Inc.

10.45  First Amendment to Agreement of Lease, dated as of May 31, 2000, between
       Purchase Corporate Park Associates, L.P. and Interliant, Inc. (Interliant
       I)

10.46  First Amendment to Agreement of Lease, dated as of May 31, 2000, between
       Purchase Corporate Park Associates, L.P. and Interliant, Inc. (Interliant
       II)

10.47  First Amendment to Agreement of Lease, dated as of May 31, 2000, between
       Purchase Corporate Park Associates, L.P. and Interliant, Inc. (Interliant
       III)

10.48  Agreement of Lease, dated as of May 31, 2000, between Purchase Corporate
       Park Associates, L.P. and Interliant, Inc. (Interliant IV)

10.49  Fifth Amendment to Sublease Agreement, dated as of July 10, 2000, by and
       between EOP-Perimeter Center, L.L.C. and Interliant, Inc.

10.50  Office Lease Agreement, dated as of February 11, 2000, by and between
       EOP-Perimeter Center, L.L.C. and Interliant, Inc.

10.51  Agreement of Sub-Sub-Sublease, dated as of May 1, 2000, between Philips
       Electronics North America Corporation and Interliant, Inc.

10.52  Engagement Letter, dated August 10, 2000, between Interliant, Inc. and
       The Feld Group, Inc.

10.53  Common Stock Purchase Warrant, dated as of August 10, 2000, between
       Interliant, Inc. and Feld Co-Investment Partnership L.P.

27     Financial Data Schedule (for SEC Use Only)

                                       19
<PAGE>

(b)  Reports on Form 8-K

          Form 8-K, dated August 21, 2000, whereby Interliant announced that it
          had entered into an agreement with The Feld Group, a Dallas, Texas-
          based technology and management services firm, whereby Bruce Graham of
          The Feld Group was named to the newly created post of chief operating
          officer (COO) of Interliant

          Form 8-K, dated September 20, 2000, whereby Interliant announced
          accelerated integration initiatives and its plan to advance EBITDA
          breakeven by two quarters.

                                      20
<PAGE>

                                   SIGNATURES


Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                       Interliant, Inc.


Date:  November 13, 2000               /s/ Herbert R. Hribar
                                       ---------------------------------
                                       Herbert R. Hribar
                                       Chief Executive Officer and President


Date:  November 13, 2000               /s/ William A. Wilson
                                       ---------------------------------
                                       William A. Wilson
                                       Chief Financial Officer

                                      21